The Ninth Circuit affirmed (copy here) the district court’s trademark infringement ruling in favor of Volkswagon by denying Auto Gold’s “first sale” defense. Auto Gold purchased genuine VW badges from Volkswagon and then mounted the badges on its marquee license plates, which were sold to Auto Gold’s customers.

Despite Auto Gold’s prominent disclaimer on its packaging that the marquee plate was not manufactured by VW, the Court held that “the ‘first sale’ doctrine does not provide a defense because the plates create a likelihood of confusion as to their origin. We do not base our holding on a likelihood of confusion among purchasers of the plates. Rather, we base it on the likelihood of post-purchase confusion among observers who see the plates on purchasers’ cars.”